Phones keep getting hacked all the time. In general, there is physical separation whenever a less trusted system has to interact with keys, like HSMs, or airgapped systems.

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I don't understand what you mean by phones getting hacked. I've never met anyone that's had their phone hacked.

I don't think hardware wallets are that popular at this moment because we can't pay directly with Bitcoin. Maybe store accept lighting everywhere we can carry around a hardware wallet and load lighting onto it before we head out the door.